Buying a Property

Buying a house, whether it is to live in or for investment may well be the biggest purchase you ever make, however, it should also be fun and exciting. Don’t let it overwhelm you.

Planning

Planning is the key to having no regrets down the road. There is a myriad of information available on government websites, to assist you with all the legal concerns (www.australia.gov.au/life-events/buying-a-property), but talking to friends and family about their experiences can be invaluable. People love to talk about about their experiences, both good and bad, so why not invite them out for a cup of coffee and a chat. Take their information on board and use a solicitor that focuses in “conveyance” law to ensure that you get the right legal advice.

Let’s take a look at how the process works:

The process of buying a house will differ depending on whether the house is sold by private treaty or at auction and rules will also vary in each state and territory. It is a good idea to use a conveyance solicitor in the State that you are purchasing the property in.

Make an Offer

Once you have found the property you like, make an offer. Starting the negotiations within 10% of the price range that you are prepared to pay is a good starting point. The seller has no obligation to sell to you whilst he is in the negotiations phase and neither have you an obligation to buy. An obligation to buy or sell only occurs once the contract has been executed by both parties.

"Gazumped?"

You may be "gazumped" — this means that even though you have a verbal agreement the property is sold to someone else for a higher price. "If you are gazumped neither the agent nor the vendor is obliged to compensate you for any money you may have spent on legal advice, inspection reports, financial applications or inquiries.

Offer Accepted

Once your offer is accepted the next step is to exchange contracts. This is the legal part of buying a home. You and the seller will sign the contract and this is when a larger deposit is requested by the seller or the seller’s agent. Normally a 10% deposit put down by the buyer, however there is no legal requirement to place a deposit on the contract. A contract with a deposit does not make the contract more enforceable than one without.

Signing the Contract

Sign the contract only when your solicitor or licensed conveyancer is happy. Once the contract is signed by both parties, you have a financial interest in the property so it is wise to get it insured. Most contracts are subject to a building and pest inspection, and finance (with access for the lender’s valuer) if a loan is required.

Cooling Off Period

In most states, except WA, there is a "cooling-off period" of up to five days where you can change your mind. You'll need to write a letter and deliver it before the period ends to cancel the contract. You will be refunded most of your deposit but a fee may be charged.

At Auction

The process is somewhat different if you buying the property at auction. If you are the successful bidder you hand over your 10 percent deposit and exchange the contract then and there. If the property is "passed in", meaning the reserve was not met and bidding has stopped, the highest bidder can negotiate with the seller and a sale is possible. If you buy a property at auction or exchange contracts on the same day after it is passed in, it's important to know that a cooling-off period does not apply.

Settlement is the term describing when you become the legal owner of the property. Settlement usually occurs 30-90 days from when you sign the contract. This can be negotiated to a period that suits both you, the seller, and your financier (if you are taking out a mortgage loan).